Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

15-30 Support department cost allocations; single-department cost pools; direct, stepdown, and reciprocal methods. Sportz, Inc. manufactures athletic shoes and athletic clothing for both amateur and

image text in transcribedimage text in transcribed 15-30 Support department cost allocations; single-department cost pools; direct, stepdown, and reciprocal methods. Sportz, Inc. manufactures athletic shoes and athletic clothing for both amateur and professional athletes. The company has two product lines (clothing and shoes), which are produced in separate manufacturing facilities; however, both manufacturing facilities share the same support services for information technology and human resources. The following shows costs (in thousands) for each manufacturing facility and for each support department. The total costs of the support departments (IT and HR) are allocated to the production departments (clothing and shoes) using a single rate based on the following: Data on the bases, by department, are given as follows: Required 1. What are the total costs of the production departments (for clothing and shoes) after the support department costs of information technology and human resources have been allocated using (a) the direct method, (b) the step-down method (allocate information technology first), (c) the step-down method (allocate human resources first), and (d) the reciprocal method? 2. Assume that all of the work of the IT department could be outsourced to an independent company for $97.50 per hour. If Sportz no longer operated its own IT department, 30% of the fixed costs of the IT department could he eliminated. Should Sportz outsource its IT services

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting For Decision Makers

Authors: Peter Atrill

8th Edition

1292099046, 978-1292099040

More Books

Students also viewed these Accounting questions

Question

What is a business incubator?

Answered: 1 week ago

Question

How is workforce planning linked to strategic planning?

Answered: 1 week ago